No. of Recommendations: 10
It was actually an error of trust as opposed to dumb but I think my experience qualifies for this thread. It happened in 1987, I was 45 then. I had a nice job and a nice home for my family. I had met a broker by way of mutual friends and we got along fine.

We had known each other for about five years. Being a broker, he often tried to get me as a customer. I finally broke down and gave him most of the money I had accumulated toward retirement to manage, a mid five figure amount. He asked for full authority on the account since I was busy with business, he didn't want to bother me each time he had an idea. I agreed to this but I repeatedly told him this was the bulk of my retirement portfolio.

Remember, in 1987, interest rates were still relatively high; thirty year mortgages 10.5% plus 1 - 2 points, 10 year Treasury around 7.5% the long bond over 8%. (that one would be maturing next year if it hasn't been called). Microsoft went public somewhere in this time period. So naturally, one day my broker called to say he had put all on my money in a stock called Virtual Reality. This was supposed to be a hot stock in a very new field and we were in on the ground floor. He had all of his money in this stock, all of his family's money as well as a lot of other clients. The stock was listed as VIRT.

When I complained that this wasn't what I had in mind when I gave him the account. He said that I was young with a lot of time to worry about retirement. Besides, he said, I guarantee you won't lose money on this investment. We're in on the ground floor.

Well, in the Fall of 1987, we went into a recession and the stock market collapsed. Experimental VIRT was having troubles turning its ideas into anything marketable much less profitable. The elevator never got of the ground floor. VIRT became worthless and we lost all.

I'm older and wiser now and have managed to fund my retirement, so please don't feel worried about me. But my friend, the broker, lost all including his wife and the dogs. I am told he moved to California and still manages other people's money (OPM). I learned my lesson...I hope he learned his.

The lesson(s) I learned were, 1)You are responsible for your investments 2) No one cares as much about your investments as you 3) Investing isn't difficult if you follow a conservative approach and keep up with the reasons for each investment's place in your portfolio
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